Arizona property — rent-for-work lease with GC tenant, need attorney referral
Member since 2023 · 3 posts · 2 votes
I'm active duty military, recently stationed in New Mexico, and I own a single-family rental in Tucson. While I was overseas during COVID, my property manager stopped doing their job — squatters moved in, the house was trashed, and I need it rehabbed.
A general contractor found the squatters, helped clear them out, and offered to live in the house doing repairs in exchange for rent credit, then pay market rent once it's livable. He's already moved in, so the arrangement is live but not yet in writing.
I'm looking for an Arizona landlord-tenant attorney who does flat-fee reviews of customized leases — specifically one comfortable with a rent-for-work structure under ARLTA. Not asking for free legal advice, just referrals and rough cost expectations.
Happy to share more details privately. Thanks.
First off, it sounds aweful that your property manager walked away from his or her duties and left you with a mess. I legitimately feel bad for your situation.
Secondly, I have done something similar to this hat you're describing but not the way you're setting it up. I can foresee some issues with setting it up the way you are describing. For example, costs vary between contractors drastically. You may believe a bathroom remodel should only cost $5,000. But the contractor may say that when he got in there is was "really bad" and he may feel justified in charging you $8,000 worth of a rent credit. He also may have been able to get the squatters out with a couple of conversations but he may want to charge you what it would cost in time and money for the average eviction which again could be justifiable. What if he wants to do the next project to make the house look nicer but you don't think it would be necessary such as whiting out the countertops for granite and it isn't something you want to spend money on. Now you may find your self in an awkward situation because he really wanted the granite countertops.
Also, if he wants to stay there longer, couldn't he just take more time to get things done? I'm not sure if your goals would be aligned well.
What I have done instead was, I bought a house that needed a lot of work, but when I went into the house, I found out that the scope of work was greater than what I wanted to take on to get it to market. However, it was in livable condition. I bought the house for $175,000 and it could be worth $330,000 if done up nicely, but it could take $100,000 to get it there; and for the time, money, and effort, I didn't think it would be worth it. So I listed it in a way to attract someone who wanted to own their own home and was willing to put in some work to get the property to their standard and I contracted with them to buy the house from me within the next 3 years at $240,000. This way, I would make about the same profit but now someone in the home had an insentive to make the home better so that they could customize it to themselves over time and they could do the work for themselves for cheaper and ultimately walk into equity when they buy the house.
In this situation our goals would be aligned. It wouldn't matter to me if the bathroom cost $5,000 or if
they wanted it upgraded and it cost them $8,000. My purchase price to them would be the same. And the more they put into the house, the more likely they are to buy the house within the designated time frame.
I use this strategy all the time. It's called a lease option strategy and I have helped lots of people do the same thing.
And when I sell the property that's a lease option, I can 1031 exchange the investment proceeds into another property which can help me put off the tax bill essentially giving me an interest free loan from the government until I sell the next property.
Anyways, this may not fit your situation exactly, but hopefully the concepts were helpful.